Did a taxpayer prove she lived outside Virginia in 2004 after ignoring three Department requests for residency evidence?

Subject

Missing residency evidence left assessment in place with one final deadline

Plain-English summary

Virginia kept the 2004 residency assessment in place because the taxpayer did not provide all requested evidence, but allowed one final 30-day opportunity. The taxpayer had filed no Virginia return. IRS information used a Virginia address, and Department records showed a Virginia driver's license renewed in 2007.

She claimed domicile in another state. Virginia requested substantiation in letters dated February 10, 2008, June 29, 2009, and October 21, 2009, but did not receive the complete documentation.

The Department had authority to investigate records, and the assessment was presumed correct. Without the missing information, the taxpayer had not carried her burden of showing nonresidency.

The ruling nevertheless enclosed another document list and gave 30 days to supply the evidence. Otherwise, tax and interest were due and additional interest could accrue.

What this means for you

• A nonresidency claim needs documents, not only a statement.
• Respond completely to each Department request and organize evidence by tax year.
• Virginia addresses and driver's-license records can prompt a residency assessment.
• An assessment remains presumed correct until the taxpayer supplies contrary proof.

Common questions

How many information requests had Virginia sent?

Three.

Did the ruling conclusively find Virginia domicile?

No. It upheld the assessment on the incomplete record and allowed one last submission.

How much additional time was granted?

Thirty days.

Citations and references

• Va. Code §§ 58.1-205 and 58.1-219.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 10-41

Original ruling text

April 8, 2010

Re: § 58.1-1821 Application: Individual Income Tax

Dear *:

This will reply to your letter in which you seek correction of the individual income tax assessment issued to you (the "Taxpayer) for the taxable year ended December 31, 2004. I apologize for the delay in responding to your letter.

FACTS

The Taxpayer did not file a Virginia income tax return for the 2004 taxable year. The Department obtained information from the Internal Revenue Service (IRS) indicating the Taxpayer used a Virginia address for several third-party information returns for the taxable year at issue. The Department also found that the Taxpayer maintained a Virginia driver's license, which was renewed in 2007. When the Taxpayer failed to provide sufficient evidence as to why she was not required to file a Virginia income tax return, the Department determined she was a domiciliary resident of Virginia and issued an assessment for the 2004 taxable year. The Taxpayer contests the assessment, claiming that she was a domiciliary resident of * (State A) during 2004.

DETERMINATION

The Department has the authority to investigate any books and records of a taxpayer in order to ascertain the proper tax liability. See Va. Code § 58.1-219. Further, Va. Code § 58.1-205 provides that in any proceeding relating to the interpretation of the tax laws of Virginia, an "assessment of a tax by the Department shall be deemed prima facie correct." As such, the burden of proof is on the Taxpayer to show she was not a resident of Virginia.

By letters dated February 10, 2008, June, 29, 2009 and October 21, 2009, the Department requested the Taxpayer to provide information to substantiate her residency in State A for the taxable year at issue. The Taxpayer failed to furnish all the documentation requested.

Because the Taxpayer has failed to furnish information required by law, I must uphold the Department's assessment issued to the Taxpayer for the 2004 taxable year. I will, however, grant the Taxpayer one more opportunity to provide the information requested to substantiate her claim. The documentation must be provided within 30 days from the date of this letter. Otherwise, the Taxpayer should remit payment of tax and interest within 30 days to avoid the accrual of additional interest. A list of the information requested is enclosed, along with a schedule showing the current balance of the assessments.

Please send the additional information or payment to the Department's Office of Tax Policy, Appeals and Rulings, P.O. Box 27203, Richmond, Virginia 23261-7203, Attn: *. If you have any questions regarding this determination, you may contact at **.

Sincerely,

Janie E. Bowen

Tax Commissioner

AR/1-2409267090.D